To the man who held stock on margin, disaster had only one face and that was falling prices.
Meaning
Describing October 1929, Galbraith shows how borrowing to invest turns a price drop into ruin, since lenders demand repayment at the worst time. The lesson is about leverage. Before borrowing to buy an investment, ask whether you could survive a sharp fall without selling.
Source: The Great Crash, 1929 (1954)
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About the author
John Kenneth Galbraith (1908–2006) was a Canadian-American economist and Harvard professor. He is known for books such as The Affluent Society and The Great Crash, 1929, which examined wealth, markets and speculation.
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